Until the early 1990s corporate treasury dealing was carried out almost entirely on the phone or via fax, but that all changed with the launch of the online trading platforms which took 61% of active FX market traders globally and 70% in Europe in 2009 according to Greenwich Associates. Corporate treasury departments can now fully automate their dealing and trading with most of their counter-parties
There are two types of online trading systems: single counter-party, typically operated by banks selling their FX and money market products, and multi-counter party systems.
Multi-counter Party Trading Platform
The main benefits of online trading platforms are that there is far more more control and transparency of dealing operations combined with improved efficiency, error reduction, time saving and straight through processing. A vital element in achieving these benefits is to integrate the online dealing service with the corporate treasury department's treasury management system. This enables the positions in the TMS to be automatically updated within seconds of a trade being executed. The dealing platforms also provide reports and analyses of trading patterns and counter-party risk.
The multi-counterparty trading platform suppliers argue that their platforms provide tighter spreads and more competition between the banking partners. This can be true, but some FX dealers in banks say that they will give slightly better rates in single bank quotes.
The online trading platforms vary. They key variations include: whether they are single counter-party or multi- counter-party services and are bank neutral or not; whether they provide integrated confirmation services; the range and type of instruments covered; the depth of liquidity, i.e. the number and size of the banks/ liquidity providers on the platform; the additional services such as portfolio order management, cross currency netting and deal confirmation included; can the system/service be used internally within the group; the level of straight through processing achievable; and the usage charges.
All of the trading platforms were originally desktop PC based, but since the launch of the launch of the new smart phones such as the iPhone, Android and Blackberry and the emergence of tablets such as the iPad, a range of mobile FX applications have been launched. There are well over 50 FX Apps on the iPhone already, so FX traders are no longer trapped behind a computer screen and can stay informed and make key trades whenever and wherever they want.